The official exchange rate jumped $55 this Thursday and closed at $1,380. It has risen 13% so far in July. Analysts warn that volatility could continue.

The official exchange rate experienced a sharp jump this Thursday, rising $55 and closing at $1,380. So far in July, the official dollar has accumulated a 13% increase. Despite the sharp rise, the government downplayed concerns and assured that it will take measures only when the value reaches the upper limit of the established range.

Official sources from the Casa Rosada (Presidential Palace) stated: "The dollar is rising within its range. When it reaches its ceiling, we will intervene and it will fall," in an attempt to reassure markets in the face of the exchange rate volatility that has intensified in recent weeks.

The wholesale and retail dollars follow the same trend

The wholesale dollar was sold at $1,374, an increase of $59 compared to the previous day, while the retail dollar reached $1,380 at Banco Nación, an increase of $55. Despite this increase, authorities emphasized that the exchange rate remains within established limits and there is no cause for concern.

The bond market and financial market prices also followed a similar trend, with the MEP dollar and the cash settlement (CCL) exchange rate exceeding $1,370. However, both fell toward the close of trading, which was attributed to intervention by the Central Bank. The MEP dollar traded at $135.94, and the CCL reached $1,360.62.

The blue dollar, meanwhile, rose $15 and was sold at $1,335, marking its lowest price of the day.

Causes behind the dollar's rise

Economist Gabriel Caamaño, a partner at Outlier, explained that demand for dollars remains strong due to the drop in foreign currency contributions from the agricultural sector, following the early payment of payments due to the temporary reduction in withholding taxes."We've had a leaner agricultural supply for a week now, and that's also being felt," Caamaño commented.

Furthermore, it is noted that the rise in demand for dollars began in June, accentuated by the dismantling of the liquidity bonds (Lefi), which released approximately $15 trillion pesos into the market. This, coupled with uncertainty over the Central Bank's reserves and the electoral tension, has driven the exchange rate to new historical highs.

Market operator Gustavo Quintana emphasized that "a clear change in trend dominated the second half of the month due to very sustained demand and a slight decline in genuine supply, which resulted in the dollar's value reaching historic highs." However, he asserted that doubts about the market's normalization will only be cleared up in the coming days. Quintana also noted that it will be difficult for the dollar to return to the values seen in early July.

Amid currency tensions, markets are awaiting the disbursement of US$2 billion from the International Monetary Fund (IMF) to the government. This amount, along with possible revisions to reserve targets, could provide some relief to the foreign exchange market.

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